Diageo Not Ready To Renew Cuervo Distribution Deal, Says Walsh
News: UK-based alcoholic drinks firm Diageo's CEO Paul Walsh has said that the company is not ready to renew a global distribution deal for Mexican tequila brand Jose Cuervo following the expiry of the current agreement in 2013. Walsh has threatened to walk away from the deal, which is worth about US$3bn. Walsh has earlier said that the company expects partial ownership of the Mexican tequila brand and more adequate reward to Diageo's shareholders in order to further distribute and develop it in the global marketplace. According to sources close to the matter, Diageo aims to take full ownership of the José Cuervo brand and the production facilities.
BMI View: Diageo's strategy is focused on marketing and brand building, with enormous sums invested in effective brand communication. The company has a highly focused and innovative marketing strategy, which has worked very well in the past. It acknowledges the strength of its eight 'global priority brands' in comparison to the rest of its portfolio and allocates disproportionate levels of marketing investment towards these brands. Similarly, it has a disproportionate, although slightly less so, marketing bias towards its 30 'local priority brands'.